In this section, you’ll learn all about home loans: the different types of loans, the different features you can get, and what it all really means when it comes to the payments you’ll be making every month or fortnight. Home loans will no longer be a mysterious black box of confusing terms, with hidden fees and other tricks that will cause you to pay more money than you really have to. You’ll be able to have an informed discussion with your bank or mortgage broker and know exactly what type of loan is right for you.
I’d recommend reading this section even if you find home loans about as exciting as watching paint dry—when you have 20+ years of home loan repayments ahead of you, it pays to know what you’re getting into!
That being said, one of the best things you can do (even if you love finance) is to talk to a mortgage broker when you’re looking at your options.
I’m sure you’re probably thinking something like “Of course you’d say that, you’re a mortgage broker”, but if you’ll forgive me the shameless plug I’ll explain to you why you should use a mortgage broker—even if it’s not me.
Compared to a bank, mortgage brokers can offer you a choice from hundreds of different loans from dozens of loan providers. They are always up to date with the latest deals and best rates, and through experience with lots of different loan scenarios we know how to maximise the chances of your loan being approved.
Going directly to a bank is fine if you know exactly what you’re looking for. In other words, you have done the research and found a loan that you think is the best option for you. But there’s always a chance that you’ve missed something, and that can be a costly mistake.
Mortgage brokers are independent. Our business relies on delighting our customers by finding them the best loan, not by choosing from a limited selection of loans that are really designed to rope you into the bank’s whole financial system.
You might also be wondering why we’re talking about finance before we’ve even started looking for a home. Surely it makes more sense to find a home you want, and then get a loan for whatever amount you need to buy that dream home, right?
This is where many first home buyers get it wrong. If you dive in to your property hunt without getting a preapproval, you’re setting yourself up for unnecessary stress and disappointment. Things can move quickly in the real estate world, and if you’re unprepared you will find yourself scrambling to secure finance in the middle of everything else, which is complicated enough as it is!
You’re much better off front-loading the effort on this and talking to a broker before you start looking for a home. Not only will you save yourself some stress, you’ll be coming to the table with a much more realistic understanding of what you can afford. You will also be able to get one up on your competition—offers that are made with finance already secured are much more attractive to real estate agents, because they have a much higher chance of going through.
Now that we’ve covered that, let’s dive in and look at the details of home loans. This will help you to have an informed conversation with your mortgage broker and make sure that you get a loan that suits your specific needs.